Splinterlands recently announced that there will be a change in the reward system. It is something that has been on the cards for a while but a couple of hours ago, we finally got clearer details about how the change will be implemented.
We know that all things being equal, we will have SPS being rewarded to players and DEC take a completely different role in the game. The incoming change is looking promising and I figured I'd share my opinion about it.
So, according to the most recent announcement by Splinterlands, ranked battle participants will start earning staked SPS tokens from battles. This also means that DEC will no longer be printed from battles and a different minting mechanism will be released.
According to the word, DEC will eventually evolve into the stablecoin it was always meant to be. The method of achieving this stability is fascinating as it will involve burning SPS tokens.
DEC will become what is termed a product-backed stable coin, mimicking traditional assets like the USD that derives value from tradable commodities. In DEC's case, the value of its stablecoinness will be from burning SPS at a preset rate of $1 worth of SPS to 975 DEC and also from sales of packs, NFTs and other in-game assets.
Keep in mind that while 975 DEC will be converted with $1 SPS, in reality, the target is still 1,000 DEC to $1. According to the publication, 975 is used to give some margin for the market or something like that. It is kind of similar to the conversion process of Hive and HBD.
Anyway, the aim of this mechanism, in theory at least, is to create a sort of balancing act between demand and supply to achieve the stability around $1 range. Packs, monsters, SPS and all the other DEC-related tradable in-game products will all work together to regulate the price of DEC.
DEC time
After reading the news, my first course of action was to swap the little Hive in my possession for DEC. In some way, we could say I'm placing an early bet on the success of this new reward mechanism.
At the time of writing, DEC is still a short distance away from the targeted peg, so I see this as an opportunity to get in cheap DEC that will eventually pump in price.
It seems I'm not the only one thinking along this line because the price of DEC has been pumping in tune with the news and I reckon it will continue to pump until we reach the peg rate.
This news-based FOMO is already having the desired effect on DEC as the demand rises and we edge closer to stability.
NFT and Packs to pump along
The focus might be on DEC but I reckon that we will see a corresponding rise in the value of packs, and monsters along the way. It doesn't even seem like a complicated pump to be honest, since these assets are normally priced in DEC anyway.
I mean, yeah, if you look at Hive-engine or Peakmonsters, you'll see dollar value being attributed to Packs and Monsters respectively. However, in reality, these assets are either minted or traded in DEC terms, so a pump in DEC could mean a corresponding pump in their value.
For chaos legion packs, in particular, this will definitely be the case since each pack is minted at a preset value of 4000 DEC. At that rate, each pack will be minted for around $4 when stability is achieved, against around $2.5 at the current price of DEC.
In fact, the current price of printing packs actually rose from previous lows due to DEC being criminally undervalued by the market. Now that this price stability mechanism is coming into the equation, we will have the price of these technically hiked, and that will definitely reflect on the price of packs in the secondary market.
When you think about it, if the price of printing or buying packs rises, it is only right that the assets you find inside the packs rise and that's what I expect to happen to chaos Legion monsters and other monsters from other collections.
My best guess is that we will see a general rise in the value of monsters and if you check Peak Monsters, you'll find that it is already happening. Just the other day, I lamented about the price of my roughly 83k collection power deck being a bit over $800 and today, the deck value is already over $900 according to Peakmonsters.
I reckon we will continue seeing the value of monsters rising until we achieve DEC stability. We're not so far away from it.
What about SPS?
As minting DEC comes to a halt, we now have more SPS being pumped into the system. On the plus side, the SPS will be staked, so this will reduce the selling pressure but only just.
I don't think this will be bearish for SPS considering that we will now be burning it to buy DEC that will be required to upgrade your deck and all that stuff.
Also, keep in mind that holding and staking SPS is incentivised through the 33% APR from earning more SPS and vouchers. There's also the governance voting, lands and participation in tournaments that make holding or staking SPS important.
I think SPS will continue down the trajectory I predicted and it will be most impacted by activities in the general crypto market. Overall, I'm quite confident that SPS will be fine and with further developments in the game related to the token, there's really no reason to be bothered about its long-term success. Just make sure you keep some liquid for when the mega pump comes around 😉.
So what are your own expectations and predictions as SPlinterlands implements another change to the game? Are you excited? what are your concerns? Share your thoughts in the comment section.
As always, don't trade with funds you can't afford to lose, keep your head on the swivel and always do your own research before investing.
